General Overview of the Exam 3 Content Product Concepts o Products broadly defined as a good service idea or a combination of these Includes the supporting services installations guarantees and warranties o Explain the difference between and give an example Good Tangible physical goods ex iPod Service These account for 80 of US economy 90 in Florida ex concert Idea concept philosophy image issue ex Mothers against drunk driving o Consumer products purchased to satisfy personal needs Classified according to how buyers behave when purchasing them Convenience products bought on the fly easy Shopping products spend more time thinking about them Specificity products specialty need Unsought products they find you like a utility insurance You don t seek them out but you need them o Business product produced for other businesses Purchased to use for operations to resell or to use in the manufacture of other products Bigger market than consumer with examples o Product hierarchy more than just the product you see or purchased o Product Hierarchy core products the physical or intangible service the customer receives Solves a basic need car solves transportation hotel solves lodging branded products the core products plus the characteristics that allow the consumer to differentiate it from similar products augmented products warranties terms of the purchase repair o Product management Product mix all the products a company sells Product line within the product lines closely related products marketed by an organization different types of Oreos Product line breadth the number of different lines that a company markets in a particular area product line depth the number of products in a product line How many different types of Oreos are in the product line o Product life cycle not all companies follow a smooth curve Technology firms often have spike increase when they introduce new products Fads grow really high and then they drop off dramatically Fashion goes in waves sometimes its popular then not then yes Introduction seven up 10 high failure rate You spend a lot of money coming up with formulas distribution advertising You lose money in the beg Growth coke zero Rate of sales increase solidify distribution Maturity diet coke Most of the profit are made cash cow Decline pepsi o How companies extend the PLC companies want to keep products in the mature phase as long as possible Try and stimulate frequent use portable toothbrushes Encourage more use per occasion supersize Encourage varied use dryer sheets as bug repellant target a new segment will extend the life cycle o Repositioning Arm and hammer switched from baking soda to a freezer deodorant o Improvements modify product formulas or service processes Wendys fries o Less risky alternatives to NPD you could do line extensions to one or more successful products but it is specifically designed to meet a different need Mercedes B class Product modification new model comes out and the old one is no longer available through the firm Cost reduction products at a lower price or lower manufacturing costs Hamburger helper used less spices Functional modification change the packaging to make product more desirable crystal light one bottle size o Down Market Extensions line extension that is less expensive targets poorer consumers o Up Market Extensions targets a higher price point Makes something more luxurious Better chocolate Sam Adams 600 beer utopia o Brand extensions product development is not closely but should be somewhat related to the existing product line New Product Development o Understand the difficulty in developing new products and why they are so likely to fail There s often a separation between the core brand and the new product Ex bic underwear Really smart people often get it wrong o 80 percentage of new products fail o 2 goals for NPD understanding NPD from 1 The firm s perspective 2 The customer s perspective o Know the 5 steps of developing a new product and their order Concept analysis think of a new concept Sometimes groups like Idea generation neilson use neurofocus brain monitoring to see what consumers like Idea screening who is your target market how much will it cost to make how much will consumers pay for it focus groups can help in this step launch pizza hut hotdog bun camel lozenges an upward trend But most ultimately fail firms have to launch new products to keep profits on small scale less expensive than full product Beta and Market Testing Product launch o Understand what each phase of the NPD process consists of o Know the 5 steps and order of the product adoption process buyer seeks information about the product people have to actually think about the product which is buyer becomes aware Awareness Evaluation Interest hard with cognitive misers sampling becomes important here Trial Adoption buyer purchases the product o Know and understand the 5 different types of product adopters and which ones a company would like to have as their customers Falls in about a normal curve Innovators first to adopt a new product companies aim to market towards these people They will control whether other people who come later will adopt or not These people may even get discounts Early adopters choose new products carefully help spread word of Early majority adopt just prior to average person Late majority skeptics who adopt new products when the feel it is mouth necessary Laggards last to adopt a new product Branding and Packaging o Brand a name term design symbol or other feature that identifies the marketer s product as distinct from other marketer s products o Understand overall why branding and packaging is so important o Ralph Lifshitz Ralph Lauren s real name Can t sell liftshitz shirts The name conveys a lot about the company o Brand Mark the symbol or design of a brand Nike swoosh o Trademark a legal designation of exclusive use of brand Could be mark shape design o and the difference o Brand loyalty and think of an example of each for brands you purchase I m aware of the brand name but I m not necessarily Recognition connected to it Insistence Preference buyer prefers product over competitive offerings product is strongly preferred buyer will accept no substitute o Brand equity the marketing and financial value associated with a brands strength in a market Coca Cola apple nike Sometimes measured as the difference in price associated with branded vs unbranded product o Family brands create offsets like Heinz ketchup steak
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